In a bold but controversial move to arrest the rapid depreciation of the cedi, the Bank of Ghana (BoG) has announced plans to inject US$1.15 billion i
In a bold but controversial move to arrest the rapid depreciation of the cedi, the Bank of Ghana (BoG) has announced plans to inject US$1.15 billion into the foreign exchange (forex) market.
The move, aimed at stabilising the currency, has, however, set the central bank on a potential policy collision course with the key economic partners—the International Monetary Fund (IMF) and the World Bank—who have consistently warned against excessive market intervention.
Mounting Forex Interventions
This latest injection brings the BoG’s total forex market support for the 2025 fiscal year to an estimated USD 4.55 billion.
The figure includes earlier interventions of US$1.4 billion in the first quarter and over US$2 billion in the second quarter of 2025.
According to the Bank, these measures are intended to cushion the cedi against persistent volatility caused by speculative trading, high import demand, and weak export inflows.
However, economic observers argue that the scale and frequency of such interventions risk undermining Ghana’s reserve position and could trigger long-term instability.
IMF and World Bank Concerns
The IMF and World Bank have long maintained that large-scale foreign exchange interventions are unsustainable and counterproductive. Both institutions favour a market-led exchange rate regime, where the cedi’s value adjusts naturally to market forces of demand and supply.
Analysts within the IMF argue that excessive interventions distort market equilibrium, discourage export competitiveness, and mask deeper structural problems in the economy.
The World Bank, too, has cautioned that such practices could erode investor confidence and reduce the transparency of Ghana’s monetary policy framework.
Reserves Under Pressure
Between March 2024 and June 2025, the BoG recorded notable progress in rebuilding its gross international reserves.
However, recent data show a worrying reversal of that trend.
The reserves fell from US$11.1 billion in June 2025 to US$10.7 billion in September 2025, marking the first decline in 15 months.
The country’s import cover ratio also slipped from 4.8 months to 4.5 months, signalling reduced capacity to cushion against external shocks.
Economists interpret this decline as a direct consequence of the central bank’s aggressive forex interventions, which are draining reserves faster than they are replenished.
“The Bank of Ghana’s approach, though well-intentioned, risks depleting our reserve buffers and undermining hard-won macroeconomic stability,” noted an IPS-Ghana policy brief on the matter.
Policy Implications and Risks
Experts warn that the BoG’s ongoing interventions, if unchecked, could erode investor confidence, weaken the cedi further, and complicate Ghana’s ongoing economic reform programme under the IMF’s Extended Credit Facility.
They argue that maintaining a steady reserve base is critical to absorbing external shocks and supporting domestic financial stability.
Recommendations
IPS-Ghana proposes a recalibration of the Bank of Ghana’s strategy to balance short-term currency support with long-term sustainability. The think tank recommends:
1. Prioritizing Reserve Accumulation:
Maintaining adequate international reserves is vital in the face of global uncertainties. Strong reserves not only boost confidence but also help economies recover quickly from external shocks.
2. Structural and Policy Reforms:
The central bank should complement monetary measures with real-sector investments and fiscal discipline, ensuring that foreign exchange inflows are driven by productive exports and not temporary capital movements.
3. Transparency and Policy Alignment:
The BoG must adopt a clear and transparent reserve management strategy that aligns with broader macroeconomic objectives and avoids policy contradictions with the IMF and World Bank.
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